ESMA to oversee crypto firms and trading platforms across EU

According to Verena Ross, head of the European Securities and Markets Authority (ESMA), the agency will now supervise stock exchanges, crypto businesses, and clearing platforms across the EU. 

She explained that Brussels is drafting proposals to shift oversight of parts of the EU’s financial markets from national regulators to ESMA, adding that the move would strengthen integration and global competitiveness.

However, Luxembourg and Malta have pushed back against the proposals, fearing the impact on crypto hubs.

Ross believes that countries having their own regulatory teams resulted in inefficiencies

The EU’s original MiCA blueprint envisioned ESMA as the lead regulator for crypto platforms and custodians. However, doubts about whether the watchdog could handle the workload led to the job being given to national regulators instead — a choice Ross says has only made things less efficient.

She detailed that harmonizing MiCA has demanded major resources from both the EU and national regulators. Thus, the need for every country to develop its own teams has created inefficiencies that could have been avoided through centralization.

She remarked, “It also means that people had to build up specific new resources and expertise 27 times in different national supervisors, which could have been done more efficiently once at a European level.” 

ESMA had even said in July that Malta’s process for granting EU-level licenses to crypto companies was flawed, pointing out gaps in risk assessment for at least one firm. The watchdog was established in 2011 to introduce greater consistency to EU financial rules. Yet, most market oversight still rests with the 27 national regulators. Ross stated, “We have tried for quite some time with the capital markets union and other initiatives to build a more effective capital market. The reality has been that it is not easy to do given we have very different market structures.” 

Mario Draghi, the ex-head of the European Central Bank, argued that transforming ESMA into a bloc-wide securities regulator — similar to the US SEC — would be essential for deepening Europe’s capital markets.

Marx has warned against making ESMA the sole supervisor 

Smaller EU nations, such as Luxembourg, Malta, and Ireland, have opposed plans for the ESMA shift, arguing that centralization could harm their financial hubs. Luxembourg’s top regulator, Claude Marx, even cautioned that making ESMA the sole supervisor of EU investment funds would risk creating what he described as a “monster.” 

Still, the ESMA chair said Europe’s massive funding needs in defense, clean energy, and digitalization have reignited efforts to remove market fragmentation. She noted, “The demand for that is so high now, given the need for finding private capital sources to support Europe’s strategic priorities, it has clearly gone up a level, not just at the EU level but also at member states.” 

Speaking last month, Commissioner Maria Luís Albuquerque also stated that the EU is exploring whether ESMA should assume the role of supervisor for large, cross-border institutions, such as exchanges, crypto firms, and central counterparties. She noted that such reforms would require ESMA to rethink its governance and decision-making, with several existing centralized supervision models serving as references.

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